The Nature of Codes of Business Ethics: A Strategic Perspective

Abstract

The role of business ethics in corporate strategy has been largely ignored in theory and practice.An unfortunate result of this phenomena is that many organizations today encounter ethics problems and pursue strategies that appear not to be based on a foundation of ethics.Business ethics should become an integral part of strategy formulation, implementation, and evaluation activities in all types and sizes of organizations.Ethics is sometimes defined as the clarification of what constitutes human welfare and the conduct necessary to promote it [9].Ethicians use the term "ethics" to refer to the study of what is morally right or wrong [21].Business ethics is a specialized study of moral judgments and values that focuses on individual behavior in organizations ([3],[6],[17]]).In his book Business and Society, Steiner [25] defines business ethics as behavior "that is fair and just, over and above obedience to ... laws ... and regulations.Loucks [23], chief executive officer of Baxter Travenol, says ethics isn't a matter of law or public relations or religonj rather, it is a matter of trust.Discussing business ethics with any degree of honesty means balancing the interests of an organization's stakeholder [23].For example, employees want high wages and good benefits, whereas customers want low prices and high quality.Thus, division XYZ may be divested while division ABC is strengthened.The risk of an airplane engine failing by a tenth of one percent may be approved in order to reduce manufacturing costs and price by thirty percent?Difficult decisions such as these characterize business ethics.Newspapers and business magazines daily report legal and moral breaches of ethical conduct in organizations.Bank fraud losses for the decade of the 1980s are expected to exceed $20 billion, compared to losses of less than $1.5 billion for the decade of the 1970s.Baxter Travenol Laboratories, IBM, Caterpillar Tractor, and Celanese are example firms tha.t have formalized their own code of business ethics.The chief executive officer of these and many other firms have spelled out the ethical standards Journal of BU8inC88 S!ra!cgic8, Volume 6, Number 1 (Spring 1989)

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